SUVs to drive PV growth in FY26, OEMs remain cautious on overall demand: Industry sources

The Nifty auto index has tanked nearly 14 percent in the last six months.

India’s passenger vehicle (PV) market is expected to see modest growth of 1-2 percent in FY26, with sport utility vehicles (SUVs) emerging as the key driver, according to top automakers who shared their outlook in a closed-door industry meeting, CNBC TV-18 reported. SUVs are projected to grow at a faster pace of around 8 percent, as demand for larger and feature-packed vehicles continues to rise.

Among individual automakers, Maruti Suzuki and Hyundai both foresee overall PV industry growth of 1-1.5 percent in the next fiscal, while Tata Motors is slightly more optimistic, projecting a 2-4 percent increase. Mahindra & Mahindra expects overall PV sales to grow by 1-2 percent but sees its utility vehicle (UV) segment expanding at 8 percent, in line with broader SUV trends.

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The cautious stance on overall PV growth reflects multiple factors, including high base effects, fluctuating consumer sentiment, and macroeconomic uncertainties. However, SUVs remain a bright spot, continuing to outpace other segments as buyers gravitate toward premium offerings with enhanced features and road presence.

As 2025 kicks off, the Auto Retail sector entered February with cautious optimism, after a promising January. According to the latest survey from FADA (Federation of Automobile Dealers Association), 43 percent expect sales to remain steady, and 11 percent foresee a slight dip.

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Concerns about shorter working days, weak rural liquidity, and inflationary pressures persist, creating uncertainty about how much growth can be achieved. Tight lending criteria, rising vehicle costs, and subdued demand in certain industrial sectors are also weighing on the sector’s overall performance.

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At about 11 am, shares of Maruti Suzuki were trading at Rs 12,404, lower by 2.2 percent. Hyundai Motor India also edged lower by 2 percent at Rs 1,839. On the other hand, Tata Motors stock rose 1.2 percent to Rs 689. M&M, the best-performing Nifty stock of 2024, was up by 2 percent at Rs 2,810. The Nifty Auto index was up nearly 1 percent in today's session. The index has tanked nearly 14 percent in the last six months.